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Gravity
A vocabulary study guide for NGPF's Investing unit. Visit www.ngpf.org for more information!
Terms in this set (38)
401(K) Match
An employer contribution made to their employees' 401(k) plan based on individual employee's contributions
401(k) Plan
A retirement savings plan, sponsored through your employer who will often match your contributions, that allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn
Asset Allocation
Dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash
Asset Class
A group of financial instruments which have similar financial characteristics and behave similarly in the marketplace (like stocks, bonds, and cash)
Bear Market
A market in which prices are falling, encouraging selling.
Bond
A security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond's maturity date
Bond Rating
A measurement of the likelihood that a bondholder will be paid back
Capital Gains Tax
A tax levied on profit from the sale of property or an investment
Bull Market
A market in which there is increased stock trading and rising stock prices
Capital Gain
Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for
Compound Interest
Reinvesting earned interest back into the principal to allow money to grow exponentially over time
Coupon
The annual interest payment on a bond, usually expressed as a percentage of its face value
Diversification
The practice of investing in a large variety of stocks, bonds, and/or funds as a way to as a way to reduce your overall risk
Dividend
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
Dollar Cost Averaging
The practice of putting a fixed amount into an investment over a period of time, regardless of the price of that investment
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Verified questions
ACCOUNTING
During its first five years of operations, Red Raider Consulting reports net income and pays dividends as follows. $$ \begin{array}{crrc} \text{Year} & \text{Net Income} & \text{Dividends} & \text{Retained Earnings }\\ \hline \text{1} & \text{$\$ 1,700$} & \text{$\$ 600$} & \text{\_\_\_\_\_}\\ \text{2} & \text{$2,200$} & \text{600} & \text{\_\_\_\_\_}\\ \text{3} & \text{$3,100$} & \text{$1,500$} & \text{\_\_\_\_\_}\\ \text{4} & \text{$4,200$} & \text{$1,500$} & \text{\_\_\_\_\_}\\ \text{5} & \text{$5,400$} & \text{$1,500$} & \text{\_\_\_\_\_}\\ \end{array} $$ Required: Calculate the balance of retained earnings at the end of each year. Note that retained earnings will always equal $0 at the beginning of year 1.
ACCOUNTING
Cleary’s Music Center has nine employees. The employees are paid weekly with overtime after 40 hours per week. The overtime rate is $1\frac{1}{2}$ times the regular rate of pay. Payroll information for the week ending June 12 follows: $$ \begin{array}{lll} \text{Employee} & \text{Pay Rate } & \text{Hours}\\ \text{David Clune} & \text{$\$ 6.95$} & \text{$33\frac{1}{2}$}\\ \text{Richard Lang} & \text{$\$ 7.80$} & \text{38}\\ \text{Jane Longas} & \text{$\$ 7.25$} & \text{43}\\ \text{Betty Quinn} & \text{$\$ 8.30$} & \text{$44\frac{1}{4}$}\\ \text{John Sullivan} & \text{$\$ 8.30$} & \text{$39\frac{1}{2}$}\\ \text{Kelly Talbert} & \text{$\$ 7.50$} & \text{40}\\ \text{Gene Trimbell} & \text{$\$ 9.75$} & \text{$42\frac{1}{2}$}\\ \text{Heidi Varney} & \text{$\$ 8.75$} & \text{$34\frac{1}{4}$}\\ \text{Kevin Wallace} & \text{$\$ 9.25$} & \text{46}\\ \end{array} $$ Prepare a form similar to the one that follows. Calculate regular earnings, overtime earnings, and gross earnings for each employee. $$ \begin{matrix} \text{ } & \text{Total} & \text{Pay} & \text{Regular} & \text{Overtime} & \text{Gross}\\ \text{Employee} & \text{Hours} & \text{Rate} & \text{Earnings} & \text{Earnings} & \text{Earnings}\\ \hline \text{Clune, David} & \text{$33\frac{1}{2}$} & \text{\$6.95} & \text{\$232.83} & \text{-0-} & \text{\$232.83}\\ \end{matrix} $$
ACCOUNTING
Regina Delgado owns a business called Hot Suds Car Wash. She uses the following accounts: $$ \begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{201 Accounts Payable—}\\ \text{110 Accounts Receivable—} & \text{Allen Vacuum Systems}\\ \text{Valley Auto} & \text{301 Regina Delgado, Capital}\\ \text{125 Office Equipment} & \text{ }\\ \text{130 Office Furniture} & \text{ }\\ \text{135 Car Wash Equipment} & \text{ }\\ \end{matrix} $$ For each transaction: 1. Determine which accounts are affected. 2. Prepare T accounts for the accounts affected. 3. Enter the debit and credit amounts in the T accounts. $$ \begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{May 5} & \text{1. Regina Delgado invested an additional $\$40,000$ cash in her business.}\\ \text{12} & \text{2. Bought another car wash system on account for $\$27,000$ from Allen Vacuum Systems.}\\ \text{17} & \text{3. Regina Delgado transferred some of her personal office furniture, valued at $\$3,750$, to her business.}\\ \text{24} & \text{4. Hot Suds Car Wash purchased additional office equipment for $\$7,500$. Payment was made by check.}\\ \text{29} & \text{5. Hot Suds Car Wash sold some surplus car washing equipment on account to Valley Auto for $\$1,200$.}\\ \end{array} $$
ACCOUNTING
Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. $$ \begin{matrix} & \text{Product G} & \text{Product B}\\ \text{Selling price per unit}\ldots\ldots\ldots & \text{\$120} & \text{\$160}\\ \text{Variable costs per unit}\ldots\ldots\ldots & \text{40} & \text{90}\\ \text{Contribution margin per unit} \ldots\ldots\ldots & \text{\$ 80} & \text{\$ 70}\\ \text{Machine hours to produce 1 unit}\ldots\ldots\ldots & \text{0.4 hours} & \text{1.0 hours}\\ \text{Maximum unit sales per month}\ldots\ldots\ldots & \text{600 units} & \text{200 units}\\ \end{matrix} $$ The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $15,000 additional fixed costs per month. 1. Determine the contribution margin per machine hour that each product generates. 2. How many units of Product G and Product B should the company produce if it continues to operate with only one shift? How much total contribution margin does this mix produce each month? 3. If the company adds another shift, how many units of Product G and Product B should it produce? How much total contribution margin would this mix produce each month? Should the company add the new shift? Explain. 4. Suppose that the company determines that it can increase Product G’s maximum sales to 700 units per month by spending$12,000 per month in marketing efforts. Should the company pursue this strategy and the double shift? Explain.
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